Insourced!

08.28.12

Why Call Center Jobs Are Coming Back

An Indian outsourcing company is bringing 1,000 call center jobs to Texas. Matthew Zeitlin looks at why insourcing is replacing outsourcing.

There is perhaps no better symbol of the globalization of the service economy than a customer service call from the United States that gets answered in India or the Philippines. NBC even managed to pick up on this multidecade trend less than two years ago with Outsourced, a poorly-reviewed and little-watched sitcom about the adventures of the lone American employee in a Mumbai call center. But NBC may have picked up on a trend just as it was reversing itself—and the show was quickly canceled.

On Monday, Aegis, a Mumbai-based outsourcing firm owned by Indian conglomerate Essar, announced it will add 1,000 new jobs in the “Dallas Metroplex” as part of a pledge it made last year to hire “more than 4,000 workers in the U.S. over the next two years.” The jobs, according to Aegis’s announcement, are a mix of full- and part-time and of sales and customer service: 230 of the new employees will be “licensed full‐time sales representatives,” 600 will be customer service representatives, and the remaining 250 will be “nonlicensed sales representatives.”

This is actually part of a small trend in the outsourcing and customer service world. For years, the inescapable logic of economics drove call-center jobs overseas. People in India or the Philippines would field customer gripes for a much lower hourly rate than Americans would. But the logic of customer service—and growing knowledge about the importance of customer interactions—is helping to bring call center jobs back to the U.S.

In January, Mary Murcott, the CEO of the Fort Worth-based outsourcing firm Novo 1, declared at a panel discussion of CEOs at the White House that call center jobs are “coming back, but nobody’s talking about it.” She estimated that at one point, 30 percent of call center jobs for high-tech firms were offshore; now, thanks to onshoring, or insourcing, it’s more like 12 percent.

Murcott pointed to a distinction in the call center world: between the simple calls and complicated calls. It used to be that you had to call a customer service representative for something as simple as resetting a password or placing an order for a product. Now many of those services are automated, meaning only more complex tasks are left to customer service representatives in call centers. These calls are “context-sensitive,” meaning that the person on the other line has to help solve a particular problem based on the specific information a customer supplies. Effectively doing this kind of call center work requires both an advanced knowledge of the products and communication skills. A phone-basher has to understand what the person on the other line is saying and must be able to be understood.

She estimated that at one point, 30 percent of call center jobs for high-tech firms were offshore; now, thanks to onshoring, or insourcing, it’s more like 12 percent.

A 2008 study by the CFI Group concluded that “when customer service representatives are perceived to speak clearly, they also resolve customer issues 88 percent of the time.” But when they’re not perceived as speaking clearly, “they resolve customer issues only 45 percent of the time.” Although the study concluded that “an in-depth understanding of products and services is as important as language skills,” they were more-or-less inextricable from each other. The survey also found, at least in 2008, that “callers still think they are being served by a contact center located in the United States.” Of the six industries surveyed, half of the customers thought that personal-computer customer-support call centers were based overseas. The PC industry also had the lowest customer satisfaction among the industries surveyed.

At the forum, Murcott said that “people have done a lot of brand damage by putting their call centers over there.” Strangely enough, Murcott argued, companies don’t necessarily advertise that they are bringing call centers back on shore. After all, if the quality of the service has gone up, and there’s a negative perception of foreign call centers, there is no need to publicize that previous service calls went overseas. But the call center industry, much maligned as a symbol of how globalization has reduced the quality of service while taking away American jobs, is of course happy to let people know when it is hiring in the country. Thus, Jobs4America, the group founded by dozens of outsourcing and customer service companies last August, which has a widely publicized goal of creating 100,000 jobs in the U.S.

The jobs themselves aren’t necessarily great. According to the Bureau of Labor Statistics, median pay for customer service representatives in 2010 was just over $14.50 an hour and $30,460 a year. The jobs, however, fit a niche in the economy that is more and more underserved. Customer service jobs certainly are not no-skill—one needs good communication skills along with basic phone and computer abilities. But they do not require a college diploma, and the training can be done on the job. There were more than 2.1 million of these customer service jobs in 2010 and the Bureau of Labor Statistics expects that number to grow 15 percent over the next decade. And the more these jobs require speaking recognizably American English, the bigger advantage Americans have in getting them. Which might mean a lot more Indian outsourcing conglomerates will be insourcing in places like Texas. And who knows, there might even be a TV show about it.